Programmbads (Sem 4/Sem 6) Mbaflex/ Mban2 (Sem 4) Pgdismn (Sem 2)

DRIVE-SPRING 2014

PROGRAMMBADS (SEM 4/SEM 6) MBAFLEX/ MBAN2 (SEM 4) PGDISMN (SEM 2)

SUBJECT CODE & NAME-MI0038/OM0011 ENTERPRISE RESOURCE PLANNING

BK ID-B1964 CREDITS AND MARKS-4 CREDITS AND 60 MARKS

Q1. Write short notes on:

 Integrated data model

 Latest trends in ERP

 Order management sub module of sales and distribution module of ERP system

 Organisational management sub module of Human resource module of ERP system

(Integrated data model, Latest trends in ERP, Order management sub module of sales and distribution module of ERP system, Organisational management sub module of Human resource module of ERP system )10 (2.5 marks each)

Answer.

Integrated data model

In the context of ERP implementation, the creation of an integrated data model is one of the most critical steps. An ERP system aims at providing access to integrated data to all the employees of an enterprise. This integrated data is used for business decision making. Once an ERP system is implemented in an enterprise, the data pertaining to a single department is no longer required. This is because an ERP system provides information related to all the departments of an enterprise, which helps employees to get updated about the activities of different departments. Therefore, while designing an ERP system, an enterprise should develop an integrated model that clearly specifies how the activities of different departments are related to each other.

Latest trends in ERP

The following are the latest trends in ERP:

Open Source ERP: Refers to an ERP system whose access code is available publicly. It allows organisations to access the code of an ERP system and customise it according to their requirements without paying extra charges for customisation and licensing to vendors. Web-enabled ERP: Allows organisations and its various stakeholders (customers, employees, suppliers, distributors, and other parties) to access business information as and when required from anywhere in the world.

Wireless ERP: Facilitates information sharing with the help of the Internet and various other devices. It allows outsiders (customers, suppliers, and shareholders) to access business information anytime. It allows access to ERP via mobile devices.

SaaS ERP: Enables organisations to get a ERP software package on rent or on license for a defined period of time instead of purchasing it. This helps organisations to reduce the costs of purchasing and implementing ERP software.

Order management sub module of sales and distribution module of ERP system

The sales and distribution module enables an organisation to perform these activities with the help of its different sub-modules. Figure shows the different sub-modules of the sales and distribution module: Figure: Different Sub-Modules of the Sales and Distribution Module

An organisation places or receives different types of orders, such as purchase order and sales order. For example, as a customer, you place an order for products that you need. Such type of order is received by an organisation and is known as sales order. An organisation receives or places orders in bulk. Therefore, it is necessary for an organisation to manage its orders effectively in order to carry out its operations smoothly. To do so, most organisations use the order management module. The order management module enables an organisation to manage its order placement function effectively. Broadly, there are two types of order management modules, which are:

Sales Order Management: This module helps an organisation to perform its sales activities effectively. In addition, it allows an organisation to manage its sales orders, contracts, and customer discounts. The module also ensures the on-time delivery of products to customers. Purchase Order Management: This module helps an organisation in performing activities, such as on-time purchase requisition, contract management, vendor selection and management, and rate negotiation. Moreover, the module allows an organisation to keep track on the activities of vendors and manage purchase orders.

Organisational management sub module of Human resource module of ERP system

The human resource management module of an ERP system works in association with various sub- modules. These sub-modules are shown in Figure:

Figure: Sub-Modules of the Human Resource Module

Organisational management can be defined as a process that includes planning, organising, leading, and controlling the efforts of human resource in order to achieve organisational goals. In other words, you can define organisational management as a method in which the operations of an organisation are broken down into several phases. This helps managers in having a clear picture of the organisation at any point of time.

The organisational management sub-module enables an organisation to:  Establish an effective organisational and reporting hierarchy, thereby maintaining a favourable work environment for employees.  Divide employees into different teams or groups based on their functions, business areas, and geographical locations.  Define the roles and responsibilities of employees in an organisation.  Define salary for each job position.

Q2. Write short notes on :

 Kanban ERP vendors

 Data Mining

 Collaborative CRM

(Kanban, ERP vendors, Data Mining, Collaborative CRM, Kanban ERP vendors, Data Mining Collaborative CRM) 10 (2.5 marks each)

Answer.

Kanban

Kanban is a Japanese term used for ‘visual record'. It is an inventory control system that was developed at Toyota in the 1950s by Taiichi Ohno. According to him, Kanban is a means through which JIT is achieved. In Toyota, it was used as a technique for managing the flow of materials on the assembly line. Over the passage of time, Kanban has become a highly effective method of production used by organisations to achieve a competitive edge in the market. Kanban is a simple and easy to understand approach that coordinates the production plan of an organisation with that of its suppliers. Some of the main advantages of Kanban are:  Involves low cost for transferring information from one source to another  Helps in responding quickly to changes  Avoids over-capacity and over-production  Eliminates wastes

ERP vendors

ERP vendors play a significant role in ERP implementation. These ERP vendors are responsible for administering the entire ERP implementation process, providing training to end users, and resolving issues that may take place during implementation. Nowadays, the ERP market is facing stiff competition due to increasing number of vendors. These vendors strive hard to fulfil the needs of customers by providing unique and innovative ERP packages.

Some of the renowned ERP vendors are:  SAP-AG  BAAN Company  Oracle Corporation  People Soft  JD Edwards World Solutions Company  Systems Software Associates Inc. (SSA)  QAD

Data Mining

The term ‘mining’—an act of extracting hidden valuables from the earth. Similarly, data mining is an act of extracting valuable information from a database. The ERP system of an organisation stores all its data in a database. With the help of data mining, this data is analysed to produce meaningful information for business decision making. More specifically, data mining is a process of finding out important elements from a database, establishing relationship among them, and generating knowledge.

Collaborative CRM

Collaborative CRM facilitates the free flow of customer information among the different departments of an organisation. This helps the organisation to understand and fulfil the requirements of customers, thereby, maintaining cordial relationships with them. For instance, you are the marketing manager in an organisation. Collaborative CRM can help you to share information related to the demand for products and services with the production department. Apart from this, collaborative CRM integrates various channels used for customer interaction. These channels include telephone, e-mail, voice chat, application sharing, desktop sharing, file transfer, and collaborative browsing. Generally, collaborative CRM is customised according to the requirements of customers.

Following are the main objectives of collaborative CRM:  Reducing customer service costs  Facilitating customer interaction  Gathering information related to customers

Q3. What are the benefits and features of ERP purchase module.

(Listing of benefits of purchase module)(Any 6 benefits), Description of features of purchase module)6,4

Answer.

Benefits of purchase module

The purchase module of an ERP system supports the overall purchasing function of an organisation starting from purchase requisition to the final payment of raw materials. The module also helps an organisation in searching prospective suppliers, negotiating prices, placing and tracking orders, and preparing invoices. In this way, the purchase module streamlines the overall procurement process of an organisation. To do so, the module maintains data related to the purchase of raw materials. The purchase module is closely integrated with production planning and inventory control modules. It also works in integration with the finance module while performing activities, such as order verification, and payment settlement. In addition, the module can work with traditional and automated procurement processes and a comprehensive information pool.

The following are the benefits of the purchase module of an ERP system:  Minimises manual operations and paperwork.  Helps in reducing inventory levels through efficient inventory management, thereby reducing overall inventory cost.  Helps in preventing unnecessary delays in production by keeping track on the available inventory.  Evaluates the performance of the existing vendors and identifies potential vendors.  Maintains data related to purchasing activities and updates it from time to time.  Maintains effective coordination among the members of a supply chain.  Generates receipt notes and invoices.

Features of purchase module

The purchase module enhances the overall purchase function of an organisation. This module is capable of performing activities, such as vendor evaluation, order placement, order tracking, and invoicing. The following are the major features of this module:

Database Management System: The purchase module maintains all data related to the purchasing of materials. The module also allows an organisation to modify the data and retrieve it as and when required.

Flexibility: The purchase module of an ERP system is quite flexible as it readily adapts to changes that take place in the business environment.

Integrated Approach: The purchase module works with other modules, such as production planning, inventory control, and finance modules.

Automation: The purchase module automates the generation, modification, and cancellation of purchase orders based on the production plan and schedule. Q4.What are the benefits and features of ERP financial module?

(Listing of benefits of financial module, Description of features of financial module)5,5

Answer.

Benefits of financial module

Some of the main benefits of the financial module of an ERP system are:  Provides authorised access to financial data to multiple users at the same time.  Converts financial values in multiple currencies.  Generates accurate financial statements.  Connects different databases through a single source.  Maintains information related to previous years’ accounts.  Updates changes in different databases automatically.

Features of financial module

The financial module is one of the most crucial modules of an ERP system. It collects financial data and generates reports, such as ledgers, trail balance, and balance sheets. In addition, the financial module monitors the flow of cash within and outside an organisation. The following are some of the important features of the financial module:

Integration of Financial System: The financial module provides integrated, up-to-date financial information to all the departments of an organisation, thereby enabling them to make sound business decisions.

General Ledger Module: The financial module includes a sub-module called general ledger. This sub-module provides information related to the current and the future financial needs of an organisation.

Effective Security Features: The ERP financial module includes security features that help an organisation to protect its financial data from misuse.

Multi-Currency System: The financial module consists of a multi-currency system that can convert a particular amount in one currency to another easily. This helps in avoiding delays in business transactions.

Multiple Payment Options: The financial module enables customers to make payments through different modes, such as online, mobile, credit card, and debit card, etc. Q5. What are the important functions of the ERP inventory management module? List any FIVE main reasons for the failure of ERP implementation.

(Description of the functions of the ERP inventory management module, Listing of five main reasons for the failure of ERP implementation) 7.5(1.5 marks for each function), 2.5 (0.5 marks for each reason)

Answer.

Functions of the ERP inventory management module

The major functions of the ERP inventory management module are material requisition management, inventory release details, particulars of stock, receipt record of internal material transfers, and inspection of inventoried stock of material. The sub-modules of the ERP inventory management module include inventory requisition, inventory order assessment, inventory order placement, supplier performa, order receipt and inspection, and invoicing.

The inventory management module of an ERP system enables an organisation to efficiently maintain the optimum level of inventory available in its warehouse. The following are some of the major functions of this module:

Material Requisition Management: The inventory management module maintains the information related to the inventory requirements, identified by the different departments of an organisation.

Inventory Release Details: The inventory management module maintains a record of the type of materials issued, in what quantity, at what time, and to which department.

Particulars of Stock Receipt: The inventory management module keeps a record of when a particular material was received to be inventoried. It also records the qualitative and quantitative specifications of materials at the time of their receipt.

Record of Internal Material Transfers: Sometimes organisations transfer materials to their other units due to a number of reasons like cost saving, prevention of wastage, etc. Such types of transfers are called internal material transfers. When internal material transfers take place, an organisation does not purchase materials. However, it receives and releases such materials. The inventory management module maintains the records of all internal material transfers in terms of the quantity of materials transferred, name of the unit to whom the materials have been transferred, etc. Inspection of Inventoried Stock of Material: The inventory management module performs automated inspection of inventoried materials, and provides information about the same. The inventory module of an ERP system works in close integration with its sub-modules. Let us discuss the functions of different sub-modules of the ERP inventory module.

Five main reasons for the failure of ERP implementation

Following are some of the reasons for the failure of ERP implementation:

Lack of Top Management Support: Refers to one of the main reasons for the failure of ERP implementation. The top management of an organisation plays a vital role in the implementation of an ERP system by providing the required resources, reassigning jobs to employees and changing work processes. In addition, if the top management supports ERP implementation, the employees also need to support it. Therefore, it is important that the top management of an organisation should be aware of the significance of implementing an ERP system.

Improper Planning and Budgeting: The ERP implementation project requires detailed planning, which involves deciding the total budget, determining the resources required, assigning jobs and responsibilities and estimating the time required for the implementation. Effective planning is crucial for the successful implementation of an ERP system. Any inaccuracy at the planning stage may lead to adverse situations, such as insufficient funds, ineffective procedures and lack of support of team members.

Selection of an Inappropriate ERP System: Different organisations have different environment, work culture and procedures. In addition, the objective of implementing an ERP system varies across different organisations. Therefore, while selecting an ERP system, an organisation should determine whether the system is able to fulfil its objectives. In addition, an organisation should determine whether the ERP system can be implemented under the existing technology and working environment. If all these aspects are not considered by an organisation while purchasing an ERP system, it may lead to the failure of the system.

Lack of Training: Employees may resist ERP implementation in case proper training is not provided to them. This is because they may have fear that their workload would increase with this implementation.

Ineffective Work Culture of an Organisation: Affects the implementation of an ERP system to a large extent. ERP implementation is more successful in an organisation where employees are willing to learn new things and are flexible to changes. On the contrary, the implementation of an ERP system fails in an organisation where employees resist any type of change in the working environment. Ineffective Communication: The implementation of an ERP system requires effective communication among different departments. Lack of communication may lead to inaccurate information, which would ultimately result in the failure of ERP. If there is smooth communication among employees, it would be easier to carry out activities involved in ERP implementation. Thus, the entire plan of ERP implementation needs to be communicated to all the employees to get their support for the implementation.

Q6. What are the different phases of ERP implementation life cycle?

(Explanation of the different phases of ERP implementation life cycle)10

Answer.

Different phases of ERP implementation life cycle

The process of implementing an ERP system in an organisation is called ERP implementation lifecycle or ERP lifecycle, which comprises a number of phases. Figure below shows the different phases of ERP implementation cycle:

Figure: ERP Implementation Lifecycle

Figure shows a chronological sequence of phases involved in the implementation of an ERP system. Let us discuss the different phases of the ERP implementation lifecycle in detail.

1. Pre-evaluation screening Pre-evaluation screening is the first phase of the ERP implementation lifecycle. It includes examining all the available ERP systems. Among these systems, those that are able to meet the organisation’s requirements are selected. 2. Package evaluation The package evaluation phase involves a deep analysis of all the shortlisted ERP systems in order to select the final system. It is the most important phase as the success of ERP implementation highly depends on the selection of the right system.

3. Project planning The project planning phase involves formulating a detailed plan for implementing an ERP system.

4. Gap analysis Gap analysis is considered to be the most crucial phase of the ERP implementation lifecycle. In this phase, an organisation develops a model that states its current status and future targets.

5. Re-engineering You have already studied in the previous unit that re-engineering is all about a complete restructuring of business processes, technology, and functions.

6. Configuration Configuration is the functional phase of the ERP implementation lifecycle. In this phase, an ERP system is synchronised with the existing system of an organisation.

7. Implementation team training In this phase, the implementation team is trained for implementing the ERP system successfully in the organisation. The training is given on the working of the ERP system and its implementation system.

8. Testing In the testing phase, the ERP system is verified by creating real situations. These real situations can be related to system overloads, invalid data entry, and hacking attacks.

9. Going live In this phase, the old system is replaced by the new ERP system in order to perform various business functions.

10. End-user training In this phase, the employees who need to work on the ERP system are identified and segregated into groups so that they can be trained to work on the new system.

11. Post-implementation The post implementation phase involves continuous evaluation of the ERP system implemented in the organisation.